Non-jurisdictional SPP members that refused to agree to potential refunds of revenues from the RTO’s seams settlement with MISO can be denied distribution of settlement proceeds, FERC ruled last week (ER16-791).

The ruling clarified the commission’s March order accepting SPP’s proposal to distribute to its members $16 million in funds reached in a settlement with MISO over the latter’s use of SPP’s transmission system to transfer power freely between its North and South regions. The order set the docket for hearing and settlement procedures to resolve factual issues in dispute. (See SPP Asks for Clarification on MISO Settlement Order.)

SPP asked the non-jurisdictional transmission owners to promise refunds of the revenues in case the allocation methodology changes as a result of the settlement procedures, but some TOs refused to agree.

The commission said SPP may withhold the settlement revenues from them, but the RTO must pay interest on any amounts withheld once the allocation is final. “SPP has not provided justification for it to withhold the settlement revenues without any interest,” FERC said.

FERC Order Allows SPP to Reduce ARRs

FERC last week accepted an SPP compliance filing that reduces the number of auction revenue rights made available in its annual allocation process (ER16-13).

SPP filed proposed Tariff revisions last October reducing the percentage of available transmission capability used to determine simultaneous feasibility.

FERC responded by asking SPP to modify section 7.3 of Attachment AE in its Tariff, specifying that transmission providers make available 60% of their transmission system capability for the fall, winter and spring seasons (October-May) during the annual ARR allocation process.

The RTO proposed corresponding revisions to the attachment removing references to assumed system capability for June-September to reduce potential ambiguity in the ARR settlement calculations during the annual transmission-congestion rights auction.

SPP to Bill Tri-County, Refund Tx Customers

FERC directed SPP to bill Tri-County Electric Cooperative for the co-op’s annual transmission revenue requirement (ATRR) with interest and to refund the amount to customers affected during a 10 1/2-month period in 2012-2013 (ER12-959).

The action corrects a “legal error” made by the commission in a 2012 docket that concluded with a 2014 affirmative order. Xcel Energy Services petitioned the D.C. Circuit Court of Appeals to review the decision, arguing that the rates at issue were SPP’s rates, not Tri-County’s.

The D.C. Circuit held that FERC failed to justify its decision to allow SPP’s filing to go into effect without a refund commitment by Tri-County, “thus failing to ensure that SPP’s rates would be just and reasonable.” The court found the commission “misapprehended its remedial powers and thus arbitrarily declined to weigh the equities underlying Xcel’s request for retroactive relief.”

FERC said it was remedying the error by directing SPP to bill Tri-County for the amounts of the co-op’s revenue requirement that SPP collected from ratepayers between April 1, 2012, and Feb. 21, 2013, with interest. It also directed SPP to make refunds to ratepayers once it received payment from Tri-County.

The proceeding began on February 2012, when SPP filed Tariff revisions to implement a formula rate in calculating Tri-County’s ATRR as a nonpublic utility participating transmission-owning member in the pricing zone of Xcel’s Southwestern Public Service.

The commission admitted it accepted SPP’s filing and set it for settlement hearings “without following its policy of accepting a rate filing to take effect pending the outcome” of further procedures when Tri-County agreed to refund the difference between the as-filed rate and FERC’s final approved rate.

Tri-County is a non-jurisdictional not-for-profit distribution cooperative with headquarters in Hooker, Okla. It serves approximately 23,000 customers in Oklahoma, Kansas, Texas, Colorado and New Mexico.

Western Farmers’ 10.87% ROE Approved

The commission accepted revisions to SPP’s Tariff adopting a formula rate for Western Farmers Electric Cooperative’s transmission service, while also sending the case to a settlement judge to address questions regarding the co-op’s return on equity and depreciation rates.

FERC’s order approved Western Farmers’ request for a return on equity of 10.87%, including a 50-basis-point adder for participation in SPP on top of its 10.37% base ROE (ER16-1774).

The commission noted that while Western Farmers is not within its jurisdiction under Section 205 of the Federal Power Act, it was “appropriate to apply the just and reasonable standard … to SPP’s proposed rates filed on behalf of Western Farmers.” That allows the utility to receive the same overall ROE “as that used by the applicable transmission zone’s dominant transmission owner.”

The commission said the case would be more appropriately addressed in settlement proceedings because Western Farmers’ proposed ROE is based on an average of other SPP transmission owner ROEs, which is not a FERC-approved methodology. FERC also said the utility proposed unsupported depreciation rates and failed to ensure wholesale customers will not be charged for capitalized construction funds and work in progress.

Western Farmers is a rural electric cooperative that provides wholesale power to 21 distribution cooperative member-owners  in Oklahoma and New Mexico, as well as Altus Air Force Base.

NPPD Allowed to Terminate QF Contracts

The commission largely granted the Nebraska Public Power District’s application to terminate a requirement that it enter into new obligations or contracts with qualifying facilities with net capacities of more than 20 MW (QM16-1).

FERC said it terminated the mandatory purchase requirement because QFs in NPPD’s territory have “nondiscriminatory access” to wholesale markets. NPPD had argued that as an SPP member, it had satisfied its regulatory requirements under the Public Utility Regulatory Policies Act and was not subject to the commission’s authority under the FPA.

The order made an exception for NextEra Energy’s Cottonwood QF, which initiated a proceeding before NPPD’s board of directors “that may result in a legally enforceable obligation.” The commission grandfathered the Cottonwood contract because the facility sent a purchase request to NPPD last November, before the utility’s original Feb. 12 application to FERC. It found Cottonwood’s letter had established “a contract or legally enforceable obligation.”

NextEra was among a handful of SPP members and QFs that intervened, saying it had three self-certified QFs in NPPD’s service territory. NextEra did not challenge NPPD’s assertion it had satisfied PURPA’s requirements, but it said NPPD failed to acknowledge two letters seeking the utility’s purchase of the output from two of its QFs.

FERC found that the second letter, sent by Sholes Wind on the same day NPPD filed with the commission, was not filed prior to Feb. 12, and thus was not grandfathered.

— Tom Kleckner